Mattersight Announces Fourth Quarter 2013 Results

Mattersight Announces Fourth Quarter 2013 Results 
CHICAGO, IL -- (Marketwired) -- 02/12/14 --  Mattersight Corporation
(NASDAQ: MATR) today announced financial results for the fourth
quarter ended December 31, 2013.  
Mattersight's total services revenue was $9.2 million, including $7.6
million of subscription revenue. The Company realized an "Adjusted
Earnings(1)" profit of $0.8 million for the fourth quarter of 2013.
Adjusted Earnings is a non-GAAP measure. For a reconciliation of
operating loss to Adjusted Earnings, see the accompanying schedule.
Mattersight's net loss was $1.5 million in the fourth quarter of
2013.  
Q4 Highlights 


 
--  Achieved record revenues of $9.2 million
--  Achieved $0.8 million of adjusted earnings
--  Attained record gross margins of 75%
--  Booked contracts with incremental ACV of $2.0 million
--  Signed twenty-five new pilots, including twenty-two routing pilots;
    fifteen of these pilots are new logos
--  Ended the quarter with a record fifty-four pilots

  
Conference Call Information
 Mattersight management will host a
conference call at 5:00 p.m. ET on Wednesday, February 12, 2014. The
conference call and slide presentation will be available at the
Investment Community section of Mattersight's website at
http://www.mattersight.com/investment/. To listen to the conference
call via telephone, please call 800.952.4789 (domestic) or
404.665.9579 (international), conference ID: 41324412. 
For those who cannot access the live broadcast, a replay of the
conference call will be available beginning approximately two hours
after the live call is completed until March 12, 2014, by dialing
855.859.2056 (domestic) or 404.537.3406 (international), conference
ID: 41324412.  
Safe Harbor for Forward-Looking Statements
 Statements in this press
release that are not historical facts are "forward-looking
statements" that are made pursuant to the safe harbor provisions of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements,
which may be identified by use of words such as "plan," "may,"
"might," "believe," "expect," "intend," "could," "would," "should,"
and other words and terms of similar meaning, involve risks and
uncertainties that could cause actual results to 
differ materially
from those described in the forward-looking statements. In addition
to other factors and matters contained or incorporated in this
document, important factors that could cause actual results or events
to differ materially from those indicated by such forward-looking
statements include, among other things, the risks detailed from time
to time in Mattersight's SEC filings. You can locate these filings on
the Investor Relations page of Mattersight's website,
www.mattersight.com. Statements included or incorporated by reference
into this press release are based upon information known to
Mattersight as of the date of this press release, and the company
assumes no obligation to publicly revise or update any
forward-looking statement for any reason. 
About Mattersight
 Mattersight is a leader in enterprise analytics
focused on customer and employee interactions and behaviors.
Mattersight(R) Behavioral Analytics captures and analyzes customer
and employee interactions, employee desktop data, and other
contextual information to optimally route customers to the best
available employee, improve operational performance, and predict
future customer and employee outcomes. Mattersight's analytics are
based on millions of proprietary algorithms and the application of
unique behavioral models. The company's SaaS+ delivery model combines
analytics in the cloud with deep customer partnerships to drive
significant business value. Mattersight's solutions are used by
leading companies in Healthcare, Insurance, Financial Services,
Telecommunications, Cable, Utilities, Education, Hospitality, and
Government. See What Matters(TM) by visiting www.Mattersight.com.  
(1) Mattersight presents Adjusted Earnings, a non-GAAP measure that
represents cash earnings performance, excluding the impact of
non-cash expenses and expense reduction activities, because
management believes that Adjusted Earnings provide investors with a
better understanding of the results of Mattersight's operations.
Management believes that Adjusted Earnings reflect Mattersight's
resources available to invest in its business and strengthen its
balance sheet. In addition, expense reduction activities can vary
significantly between periods on the basis of factors that management
does not believe reflect current-period operating performance.
Although similar adjustments for expense reduction activities may be
recorded in future periods, the size and frequency of these
adjustments cannot be predicted. The Adjusted Earnings measure should
be considered in addition to, not as a substitute for or superior to,
operating income, cash flows or other measures of financial
performance prepared in accordance with GAAP.  


 
                                                                            
                          MATTERSIGHT CORPORATION                           
                    CONSOLIDATED STATEMENTS OF OPERATIONS                   
             (Unaudited and in thousands, except per share data)            
                                                                            
                                        For the               For the       
                                 --------------------  ---------------------
                                  Three Months Ended    Twelve Months Ended 
                                 --------------------  ---------------------
                                  Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31, 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  ----------
Revenue:                                                                    
  Behavioral Analytics revenue   $   8,938  $   8,343  $  33,005  $  32,138 
  Other revenue                        233        285      1,206      1,314 
                                 ---------  ---------  ---------  ----------
    Total services revenue           9,171      8,628     34,211     33,452 
  Reimbursed expenses                   96         97        283        411 
                                 ---------  ---------  ---------  ----------
Total revenue                        9,267      8,725     34,494     33,863 
Operating expenses:                                                         
  Cost of Behavioral Analytics                                              
   revenue                           2,181      3,245     10,139     12,208 
  Cost of other revenue                100        156        617        702 
                                 ---------  ---------  ---------  ----------
    Cost of services                 2,281      3,401     10,756     12,910 
  Reimbursed expenses                   96         97        283        411 
                                 ---------  ---------  ---------  ----------
Total cost of revenue, exclusive                                            
 of depreciation and                                                        
 amortization shown below:           2,377      3,498     11,039     13,321 
  Sales, marketing and                                                      
   development                       5,250      6,571     21,752     23,142 
  General and administrati
ve         2,156      2,341      8,781      8,255 
  Severance and related costs           --         --        154        693 
  Depreciation                         764        915      3,450      3,419 
  Amortization of intangibles          (77)        17         66         81 
                                 ---------  ---------  ---------  ----------
Total operating expenses            10,470     13,342     45,242     48,911 
                                 ---------  ---------  ---------  ----------
                                                                            
Operating loss                      (1,203)    (4,617)   (10,748)   (15,048)
Interest and other expense, net       (346)       (81)      (659)      (384)
                                 ---------  ---------  ---------  --------- 
Loss from continuing operations                                             
 before income taxes                (1,549)    (4,698)   (11,407)   (15,432)
Income tax benefit (provision)          15         (8)       244        (38)
                                 ---------  ---------  ---------  --------- 
Loss from continuing operations     (1,534)    (4,706)   (11,163)   (15,470)
Income from discontinued                                                    
 operations, net of tax                 --         21         --        249 
                                 ---------  ---------  ---------  --------- 
Net loss                            (1,534)    (4,685)   (11,163)   (15,221)
Series B Stock fair value over                                              
 stated value                           --         --         --        (69)
Dividends related to Series B                                               
 Stock                                (148)      (147)      (589)      (591)
                                 ---------  ---------  ---------  --------- 
Net loss available to Common                                                
 Stock holders                   $  (1,682) $  (4,832) $ (11,752) $ (15,881)
                                 =========  =========  =========  ========= 
                                                                            
Per share of Common Stock:                                                  
Basic loss from continuing                                                  
 operations                      $   (0.10) $   (0.30) $   (0.70) $   (1.01)
                                 =========  =========  =========  ========= 
Basic income from discontinued                                              
 operations                      $      --  $      --  $      --  $    0.02 
                                 =========  =========  =========  ========= 
Basic net loss available to                                                 
 Common Stock holders            $   (0.10) $   (0.30) $   (0.70) $   (0.99)
                                 =========  =========  =========  ========= 
                                                                            
Per share of Common Stock:                                                  
Diluted loss from continuing                                                
 operations                      $   (0.10) $   (0.30) $   (0.70) $   (1.01)
                                 =========  =========  =========  ========= 
Diluted income fro
m discontinued                                            
 operations                      $      --  $      --  $      --  $    0.02 
                                 =========  =========  =========  ========= 
Diluted net loss available to                                               
 Common Stock holders            $   (0.10) $   (0.30) $   (0.70) $   (0.99)
                                 =========  =========  =========  ========= 
                                                                            
Shares used to calculate basic                                              
 net loss per share                 17,342     16,223     16,722     16,002 
                                 =========  =========  =========  ========= 
Shares used to calculate diluted                                            
 net loss per share                 17,342     16,223     16,722     16,002 
                                 =========  =========  =========  ========= 
                                                                            
Stock-based compensation,                                                   
 primarily restricted stock, is                                             
 included in individual line                                                
 items above:                                                               
  Cost of Behavioral Analytics                                              
   revenue                       $      59  $       2  $     267  $      16 
  Sales, marketing and                                                      
   development                         780        530      3,874      2,308 
  General and administrative           498        349      2,151      1,405 
  Severance and related costs           --         --         29        268 
                                                                            
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
               CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS                
                        (Unaudited and in thousands)                        
                                                                            
                                        For the               For the       
                                 --------------------  -------------------- 
                                  Three Months Ended    Twelve Months Ended 
                                 --------------------  -------------------- 
                                  Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31, 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
Net loss                         $  (1,534) $  (4,685) $ (11,163) $ (15,221)
Other comprehensive loss:                       
                            
Effect of currency translation           6          2          6         (1)
                                 ---------  ---------  ---------  --------- 
Comprehensive net loss           $  (1,528) $  (4,683) $ (11,157) $ (15,222)
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
                        CONSOLIDATED BALANCE SHEETS                         
       (Unaudited and in thousands, except share and per share data)        
                                                                            
                                              December 31,    December 31,  
                                                  2013            2012      
                                             --------------  -------------- 
                   ASSETS:                                                  
Current Assets:                                                             
  Cash and cash equivalents                  $       13,392  $       14,419 
  Receivables (net of allowances of $12 and                                 
   $12)                                               2,384           2,568 
  Prepaid expenses                                    3,576           4,359 
  Other current assets                                  427             305 
                                             --------------  -------------- 
    Total current assets                             19,779          21,651 
Equipment and leasehold improvements, net             5,158           4,727 
Goodwill                                                972             972 
Intangibles, net                                        409         
    236 
Other long-term assets                                4,431           3,776 
                                             --------------  -------------- 
    Total assets                             $       30,749  $       31,362 
                                             ==============  ============== 
                                                                            
    LIABILITIES AND STOCKHOLDERS' EQUITY:                                   
Current Liabilities:                                                        
  Short-term debt                            $           --  $        3,703 
  Accounts payable                                      752             781 
  Accrued compensation and related costs              1,118           1,335 
  Unearned revenue                                    7,215           5,853 
  Other current liabilities                           4,098           2,889 
                                             --------------  -------------- 
    Total current liabilities                        13,183          14,561 
Long-term unearned revenue                            2,866           2,374 
Other long-term liabilities                           1,607           1,231 
                                             --------------  -------------- 
    Total liabilities                                17,656          18,166 
                                             --------------  -------------- 
                                                                            
Series B Stock, $0.01 par value; 5,000,000                                  
 shares authorized and designated; 1,649,122                                
 and 1,649,201 shares issued and outstanding                                
 at December 31, 2013 and December 31, 2012,                                
 respectively, with a liquidation preference                                
 of $9,294 and $8,705 at December 31, 2013                                  
 and December 31, 2012, respectively                  8,411           8,411 
                                                                            
Stockholders' Equity:                                                       
  Preferred stock, $0.01 par value;                                         
   35,000,000 shares authorized; none issued                                
   and outstanding                                       --              -- 
  Common Stock, $0.01 par value; 50,000,000                                 
   shares authorized; 20,465,984 and                                        
   18,407,848 shares issued at December 31,                                 
   2013, and December 31, 2012,                                             
   respectively; and 18,886,966 and                                         
   17,114,880 outstanding at December 31,                                   
   2013 and December 31, 2012, respectively             205             184 
  Additional paid-in
 capital                        228,755         216,667 
  Accumulated deficit                              (212,163)       (201,000)
  Treasury stock, at cost, 1,579,018 and                                    
   1,292,968 shares at December 31, 2013 and                                
   December 31, 2012, respectively                   (8,082)         (7,027)
  Accumulated other comprehensive loss               (4,033)         (4,039)
                                             --------------  -------------- 
    Total stockholders' equity                        4,682           4,785 
                                             --------------  -------------- 
    Total liabilities and stockholders'                                     
     equity                                  $       30,749  $       31,362 
                                             ==============  ============== 
                                                                            
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                        (Unaudited and in thousands)                        
                                                                            
                                                         For the            
                                             ------------------------------ 
                                                   Twelve Months Ended      
                                             ------------------------------ 
                                              December 31,    December 31,  
                                                  2013            2012      
                                             --------------  -------------- 
Cash Flows from Operating Activities:                                       
  Net loss                                   $      (11,163) $      (15,221)
  Less: net income from discontinued                                        
   operations                                            --             249 
                                             --------------  -------------- 
  Net loss from continuing operations               (11,163)        (15,470)
  Adjustments to reconcile net loss from                                    
   continuing operations to net cash                                        
   provided by (used in) operating                                          
   activities:                                                              
    Depreciation and amortization                     3,516           3,500 
    Stock-based compensation                          6,292           3,729 
    Severance and related costs                          29             268 
    Change in fair value of warrant                                         
     liability                                          125              -- 
    Other                                                 2               2 
  Changes in assets and liabilities:                                        
    Receivables                                         184             (27)
    Prepaid expenses                                    739           1,879 
    Other assets                                       (112)            (50)
    Accounts payable                                    (29)            (31)
    Accrued compensation and related costs             (217)            (47)
    Unearned revenue                                  1,854          (4,592)
    Other liabilities                                   330            (177)
                                             --------------  -------------- 
      Total adjustments                              12,713           4,454 
                                             --------------  -------------- 
        Net cash provided by (used in)                                      
         continuing operations                        1,550         (11,016)
        Net cash provided by discontinued                                   
         operations                                      --              24 
                                             --------------  -------------- 
        Net cash provided by (used in)                                      
         operating activities                         1,550         (10,992)
                                             --------------  -------------- 
Cash Flows from Investing Activities:                                       
  Capital expenditures and other                     (1,233)         (2,081)
  Patents and trademarks                               (239)            (79)
                                             --------------  -------------- 
        Net cash used in continuing                                         
         investing activities                        (1,472)         (2,160)
        Net cash used in discontinued                                       
         investing activities                            --              -- 
                                             --------------  -------------- 
        Net cash used in investing                                          
         activities                                  (1,472)         (2,160)
                                             --------------  -------------- 
Cash Flows from Financing Activities:                                       
  Proceeds from issuance of Common Stock,                                   
   net                                                5,621              -- 
  Proceeds from line of credit                        2,400           3,691 
  Repayments from line of credit                     (6,096)             -- 
  Principal payments under capital lease                                    
   obligations                                       (2,117)         (2,311)
  Acquisition of treasury stock                      (1,055)         (1,136)
  Proceeds from stock compensation and                                      
   employee stock purchase plans, net                   138             802 
  Proceeds from issuance of stock warrants                4              -- 
  Fees from issuance of Common Stock                     --             (49)
  Decrease in restricted cash                            --           1,500 
  Purchase of shares of Series B Stock                   --          (3,743)
  Payment of Series B Stock dividends                    --            (595)
                                             --------------  -------------- 
        Net cash used in continuing                                         
         financing activities                        (1,105)         (1,841)
        Net cash used in discontinued                                       
         financing activities                            --              -- 
                                             --------------  -------------- 
        Net cash used in financing                                          
         activities                                  (1,105)         (1,841)
                                             --------------  -------------- 
Effect of exchange rate changes on cash and                                 
 cash equivalents by continuing operations               --               4 
Effect of exchange rate changes on cash and                                 
 cash equivalents by discontinued operations             --              -- 
                                             --------------  -------------- 
Effect of exchange rate changes on cash and                                 
 cash equivalents                                        --               4 
                                             --------------  -------------- 
Decrease in cash and c
ash equivalents                (1,027)        (14,989)
Cash and cash equivalents, beginning of                                     
 period                                              14,419          29,408 
                                             --------------  -------------- 
Cash and cash equivalents of continuing                                     
 operations, end of period                   $       13,392  $       14,419 
                                             ==============  ============== 
                                                                            
                                                                            
                                                         For the            
                                             ------------------------------ 
                                                   Twelve Months Ended      
                                             ------------------------------ 
                                              December 31,    December 31,  
                                                  2013            2012      
                                             --------------  -------------- 
Non-Cash Investing and Financing                                            
 Transactions:                                                              
  Capital lease obligations incurred         $        2,973  $        1,793 
  Capital equipment purchased on credit               2,973           1,793 
  Fair value of warrants classified as                                      
   liability                                            785              -- 
Supplemental Disclosures of Cash Flow                                       
 Information:                                                               
  Interest paid                              $          403  $          371 
                                                                            
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
                  CALCULATION OF ADJUSTED EARNINGS MEASURE                  
                        (Unaudited and in thousands)                        
                                                                            
                                        For the               For the       
                                 --------------------  -------------------- 
                                  Three Months Ended    Twelve Months Ended 
                                 --------------------  -------------------- 
                                  Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31, 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
GAAP -- Operating loss           $  (1,203) $  (4,617) $ (10,748) $ (15,048)
                                                                            
Add back (reduce) the effect of:                                            
Stock-based compensation             1,337        881      6,292      3,729 
Severance and related costs             --         --        154        693 
Depreciation and amortization          687        932      3,516      3,500 
                                 ---------  ---------  ---------  --------- 
Adjusted earnings measure --                                                
 earnings (loss)                 $     821  $  (2,804) $    (786) $  (7,126)
                                 =========  =========  =========  ========= 

  
Contact
Mark Iserloth
Vice President and Chief Financial Officer
312.454.3613
ir@mattersight.com 
 
 
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